Pollution Control Board No. 00-211 Appeal from the Illinois Pollution Control Board
The opinion of the court was delivered by: Justice McDADE
JUSTICE McDADE delivered the judgment of the court, with opinion.
Justice Carter and Justice Wright concurred in the judgment and opinion.
¶1 Petitioner, Toyal America, Inc., appeals from an order entered by the Illinois Pollution Control Board (Board). Petitioner maintains that the Board erred when it entered a $716,440 civil penalty against petitioner. We affirm.
¶ 3 Petitioner is part of the Toyal Group of companies, a global leader in the manufacturing of aluminum powders and advanced aluminum pigments for applications in automotive and industrial coating markets. The Toyal facility at issue in this case (the facility) is located in Chicago's ozone nonattainment area. Petitioner has operated the facility since 1996.
¶ 4 Pursuant to the federal Clean Air Act (CAA) (42 U.S.C. §7401 et seq. (West 2006)), the Board developed and promulgated regulations requiring facilities in the Chicago nonattainment area that had the potential to emit at least 25 tons of volatile organic material (VOM) per year to control and reduce their VOM emissions by at least 81%. See 35 Ill. Adm. Code §218.986(a) (West 2012). This specific regulation became effective March 15, 1995. From March 15, 1995 until April 2003, petitioner operated the facility in violation of section 218.986(a).
¶ 6 In February 1992, the Illinois Environmental Protection Agency (IEPA) requested information from petitioner regarding the VOM emissions at the facility. Petitioner reported maximum theoretical VOM emissions of 82 tons, though it stated that it considered its practical emissions to be 41.5 tons per year. Defendant further reported actual VOM emissions of 28.07 tons in 1990 and 33.61 tons in 1991. Because its emissions were in excess of 25 tons per year, defendant was subject to the VOM control requirements found in section 218.986(a). See 35 Ill. Adm. Code §218.986(a) (West 2012).
¶ 7 After operating out of compliance for almost a year, petitioner submitted a Clear Air Act Permit Program (CAAPP) application to the IEPA in March 1996. In its application, petitioner admitted that its emission units were not in compliance with section 218.986(a); however, it represented that it would install control equipment and demonstrate compliance by November 1998.
¶ 8 In January 1997, petitioner hired a consultant to assist in evaluating its VOM sources. The next month, petitioner sought internal company approval to investigate control technology to comply with the VOM standards. Petitioner subsequently submitted a construction permit application to the IEPA in late May 1998 to install and use a recuperative catalytic oxidizer (RCO) unit to control emissions.
¶ 9 Petitioner began construction of the RCO in September 1998. The RCO became operational on December 1, 1998. Although petitioner had scheduled a stack test with the IEPA on December 30, 1998, petitioner canceled the test after it learned that the RCO would not demonstrate compliance. Petitioner requested a new stack test on February 29, 1999. Petitioner did not conduct the February 1999 test, nor did it conduct any other test for over four more years. Instead, petitioner continued to operate the facility in violation of section 218.986(a).
¶ 10 In April 2001, petitioner submitted a construction permit application to the IEPA, which proposed construction of new VOM control equipment at the facility. The application also included a separate plan for expansion of the facility as a whole. This separate plan included an expansion of the facility's production units. The capital cost of the expansion was between $5 million and $6 million dollars.
¶ 11 As to that portion of the application concerning the new VOM equipment, petitioner reported that seven separate processing units at the facility, consisting of 83 separate emission sources, were not in compliance with the applicable VOM emissions regulations. Petitioner's application explained that it would control its VOM emissions with a regenerative thermal oxidizer (RTO), rather than the RCO. Petitioner advised the IEPA that it would test the RTO for compliance in May 2002. On February 19, 2002, however, petitioner requested an extension of the RTO construction permit and again sought to delay the date for demonstrating compliance. Although it received another extension, petitioner never purchased the RTO equipment.
¶ 12 In 2002, petitioner again sought an extension of the compliance test. At this time, petitioner acknowledged that, prior to 2002, "it had internal management issues that caused friction between the IEPA and [itself]." Petitioner also acknowledged that it "did not understand the [compliance] problem enough to resolve it." The briefs are unclear whether petitioner was granted another extension.
¶ 13 In late 2002, petitioner informed the IEPA that it had abandoned the RTO proposal and instead would use a "modified" RCO to control its VOM emissions. Petitioner's "modified" RCO plan involved using the same RCO unit it had purchased in 1998, but connecting it to more of the facility's VOM emission sources. On April 23, 2003, petitioner demonstrated compliance with section 218.986(a).
¶ 14 In July 2005, petitioner replaced its "modified" RCO system with a catalytic recuperative oxidizer (CRO) unit. Petitioner purchased the CRO, in part, because the RCO unit caused periodic shutdowns and interruptions in production. In addition, the CRO unit increased the efficiency of the facility. Petitioner was able to arrange for permitting, construction, and operation of the CRO unit within one year.
¶ 15Enforcement Proceedings
¶ 16 In May 2000, the State filed a seven-count complaint against petitioner with the Board. Count I of the complaint alleged that petitioner failed to control its VOM emissions in violation of section 218.986(a) (35 Ill. Adm. Code § 218.986(a) (West 2012). Count II alleged that, as a result of its failure to control its VOM emissions according to industry standards, petitioner caused, allowed, or threatened air pollution in violation of section 9(a) of the Environmental Protection Act (Act) (415 ILCS 5/9(a) (West 2008)).*fn1
¶ 17 An administrative hearing was held before a Board hearing officer on the complaint. At the hearing, petitioner did not dispute that it violated section 218.986(a) or section 9(a). Instead, the hearing merely addressed the parties' dispute over the appropriate penalty for petitioner's noncompliance during the eight-year period.
¶ 18 The State called Gary Styzens as its economic benefit analysis expert. Styzens is employed in the IEPA's finance and administration section as its economic benefit analyst and financial analyst. He is a certified internal auditor who has 25 years of experience in internal auditing. Styzens estimated that the total economic benefit that petitioner accrued as a result of its noncompliance with section 218.986(a) was $316,449. Styzens explained that analysis of an economic benefit is done on a case-by-case basis, to determine how a noncompliant entity had a financial advantage by delaying or avoiding capital expenditures during a noncompliance period, which provided the entity with an opportunity to invest in other areas besides environmental compliance.
¶ 19 In computing petitioner's total economic benefit, Styzen split the noncompliance period into two distinct terms (Phase I and Phase II) to reflect petitioner's two-phased approach to achieving compliance.
"1. Phase 1 Non-compliance period March 15, 1995 through December 31, 1998 $33,642 in economic benefit associated with the delay in capital expenditures during Phase 1.
$162, 911 in economic benefit associated with annual avoided capital/operating ...